Record Quarterly Financial Performance
Delivered record first quarter net revenues of $663 million and record adjusted EBITDA of $257 million, reflecting strong execution across the portfolio.
Churchill Downs
· CHDN
April 22nd, 2026
Summary
- Earnings Call Date:
- 2026-04-22
- Change Since:
- -5.58%
- Next Earnings Date:
- 2026-07-29
Earnings Call Sentiment
PositiveThe call conveyed predominantly positive operational and financial momentum: record revenues and adjusted EBITDA, strong free cash flow, robust HRM growth in Kentucky (17% EBITDA increase) and solid gains in Virginia (6% EBITDA increase), successful launch of Marshall Yards, early traction from ETGs, and strategic acquisition of Preakness IP. Challenges cited were localized (weather-related disruption, Louisiana HRM cessation), some competitive impacts and customer-mix softness outside Kentucky, and ongoing regulatory uncertainty. Overall, the positives — including clear growth initiatives, solid cash generation, and targeted capital deployment — materially outweigh the manageable headwinds discussed.
Company Guidance
Management reiterated 2026 capital guidance of $180–$220 million in project capex and $90–$110 million in maintenance capex, reported Q1 free cash flow of $276 million ($3.94/share) and bank‑covenant net leverage of 3.9x, and affirmed Derby‑week upside with $15–$20 million of incremental EBITDA year‑over‑year and expectations to significantly outpace last year (and Derby 150) with a likely sell‑out; operational timelines include 48 race dates at Colonial Downs in 2026, a mid‑2027 opening target for Rockingham Grand Casino, and completion of the Victory Run project by 2028, while the announced Preakness IP deal carries a $3.0 million base fee (growing 2.5% annually beginning 2028) plus 2% of combined Preakness/Black‑Eyed Susan handle (combined handle ~ $140 million in the prior year), and the company will continue rolling out HRM electronic table games throughout 2026 and beyond.
Strong Free Cash Flow and Capital Discipline
Generated $276 million of free cash flow ($3.94 per share) in Q1, supporting reinvestment and shareholder returns; ended the quarter with bank covenant net leverage of 3.9x. Project capex of $40 million in Q1 with full-year 2026 project guidance of $180–$220 million and maintenance capex guidance of $90–$110 million.
Live & Historical Racing and Kentucky HRM Momentum
Live & Historical Racing segment delivered record quarterly performance; adjusted EBITDA increased more than $11 million (approximately 11% year-over-year). Kentucky HRMs delivered adjusted EBITDA growth of more than $9 million, or 17% year-over-year, aided by the timely, on-budget opening of Marshall Yards in February (eighth HRM in Kentucky).
Virginia Progress and Colonial Downs Success
Virginia adjusted EBITDA increased by $3 million, or 6% year-over-year. Colonial Downs hosted a sold-out Virginia Derby with a 19% increase in handle versus prior year (third-highest wagering day in Colonial Downs history).
Wagering Services Growth
Wagering Services and Solutions segment adjusted EBITDA rose 8% year-over-year, driven by retail sports betting, online market access agreements, and expansion of the XASSA platform; TwinSpires showed modest EBITDA growth aided by lower legal expenses.
Early Success with Electronic Table Games (ETGs)
Rolled out roulette-based ETGs at six Kentucky HRM properties in Q1; early indications are encouraging with ETGs accretive to GGR, initial customer database growth and new customers, and plans to expand machines and introduce additional ETG products (craps, blackjack) through 2026.
Strategic Acquisition of Preakness & Black-Eyed Susan IP
Signed definitive agreement to acquire IP rights for the Preakness Stakes and Black-Eyed Susan Stakes (subject to closing). Proposed fee structure disclosed: $3.0 million base fee (growing 2.5% annually beginning 2028) plus 2% of handle for the two race days; combined handle for those two days was roughly $140 million last year.
Derby Week Investment and Expected Incremental EBITDA
Continued investments in Kentucky Derby hospitality (Mansion renovations, Finish Line Suites, Victory Run project targeted for 2028). Derby Week attendance exceeded 370,000 last year; company expects to outpace last year and Derby 150, anticipates sellout and confirmed incremental Derby EBITDA of $15–$20 million year-over-year.
New Development Pipeline
Rockingham Grand Casino in Salem, New Hampshire remains on track for a mid-2027 opening, representing expansion into an attractive market.
Operator
Good day, ladies and gentlemen, and welcome to the Churchill Downs Incorporated First Quarter 2026 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. We ask all question-and-answer participants to please limit themselves to one question. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Sam Ullrich, Vice President, Investor Relations.
Sam Ullrich
Thank you. Good morning, and welcome to our first quarter 2026 earnings conference call. After the company's prepared remarks, we will open the call for your questions. The company's 2026 first quarter business results were released yesterday afternoon. A copy of this release announcing results and other financial and statistical information about the period to be presented in this conference call, including information required by Regulation G, is available at the section of the company's website titled News, located at churchilldownsincorporated.com, as well as in the website's investor section. Before we get started, I would like to remind you that some of the statements that we make today may include forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC, specifically the most rec...
Subscribe to unlock transcripts
Get The Fly Pro 7 days for free